A PROMISE TO KEEP: 5%
A Ballot Committee of Citizens for Limited Taxation


Patriot Ledger
Quincy, Mass.
Saturday, March 21, 1998

Give us our promised tax cut


It’s time for the Democrats in the Massachusetts Legislature -- especially House Speaker Thomas Finneran -- to get the message: It’s about keeping your promise.

In the current debate over what to do with the ballooning state revenue surplus -- that is, how much of it to give back to ordinary citizens and how much to save for a rainy day -- it need not be a close call. The first priority should be eliminating the state income tax surcharge that was imposed in 1989 to stave off financial disaster during the last recession.

You may remember that the legislature voted back then to raise the tax rate on ordinary income fro 5 percent to 5.75 percent -- and later to 5.95 percent. Partly, the new taxes were to pay for a $1 billion bond issue needed to keep the state solvent after the collapse of the "Massachusetts Miracle."

What some legislative leaders apparently don’t remember is that the tax increase, or surcharge, was to be temporary. That $1 billion bond issue was paid off last December. So why are taxpayers still being charged for it?

Part of the skirmishing concerns the size of the so-called "rainy day" stabilization fund that the legislature established in 1986 to help weather future recessions. The idea was that revenue surpluses would go into the fund until it reached 5 percent of state revenue. Right now, the rainy day fund has about $800 million. With an estimated revenue surplus for the current year of another $800 million, it’s clear that the fund will soon be overflowing and that a tax benefit should result.

But, surprise! Finneran and some other legislators have all sorts of other ideas about what they’d like to do with the surplus. Finneran argues that the rainy day fund isn’t big enough to keep the state above water in the next recession. He wants to raise it to 7 ½ percent of state revenues, or about $1.4 billion. Under that plan, you could kiss your tax refund and/or tax cut good-bye.

Other legislators are talking about paying for capital projects with the surplus, and some are eyeing the threatened reduction in federal funds to pay for the Big Dig.

But the message these legislators should be getting from their constituents is this: Show us our tax cut first, and then we’ll talk.

Finneran and the other legislators who want to reduce the size of the tax cut are like kids in a candy store. They see all this money coming in, and the want to use if for new goodies—not for what they agreed to in the first place.

No wonder ordinary citizens are cynical about government.

All we are asking is that the Legislature play by the rules and do what it said it would do. There’s nothing temporary about a surcharge that continues after the reason for which it was imposed has disappeared.


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